Billions have been wasted in a drive to fit green boilers in homes which could have made air pollution worse, MPs warned last night.

The scheme is expected to cost £23billion but only 60,000 boilers have been installed in the past four years.

Half were boilers that burn biomass such as wood, which cause a ‘serious public health issue’ by pumping out smoke and worsening local air quality, said the Commons public accounts committee.

The Renewable Heat Incentive (RHI) is also open to fraud, added a scathing report.

Under the initiative, businesses and households pay for a renewable energy boiler upfront then receive payments for up to 20 years depending on the amount of heat they produce.

However, it is open to ‘gaming’, said MPs.

Some unscrupulous homeowners can double the amount they produce by using heat generated under the RHI to dry wood or other materials.

This can then be fed back into the boiler to burn it and generate even more heat – and money from the public purse.

The scheme was started in 2011 by Chris Huhne, then Liberal Democrat energy secretary, for businesses then extended to domestic customers three years later. Households and firms can apply for grants to switch from fossil fuel heating systems to renewable ones such as biomass boilers, which burn wood pellets, chips or logs, and ground or air source heat pumps.

As the scheme is open to applications until 2021, final payments to participants will run to at least 2041. By this time, the bill for taxpayers is expected to hit £23billion.

Originally, ministers expected to install 513,000 new systems but now admit the scheme will only fund 111,000. Civil servants told MPs that their forecasts suffered from ‘optimism bias’.

Over the past four years, just 60,000 new renewable boilers have been installed in homes compared to 6.2million gas systems. The MPs found that the take-up under the RHI was much lower than expected because of the hassle factor and huge upfront installation cost, which is much higher than conventional gas boilers.

Many of the new systems would have been installed anyway so the scheme did not offer value for money, added the committee.

It was scathing of the fact that the RHI encouraged people to install biomass boilers even though they increase pollution.